Market Profile - Daily updates

[CJS]

8/26/15 Recap and prep (for 8/27) It appears to me that most of the morning the mkt was adjusting the long overnight inventory. Buyers were waiting in force near yesterday's settle. 41 contracts on the low which was 7 ticks above the settle.

When traders do not wait until a mechanical reference (mechanical references are levels such as O/N high and low, pit session high and low, 1/2 back, etc.) to step in, it is a sign of strength. Between these innovators, early adopters and the rest of the herd, they steamrolled the bears - and any other trapped shorts expecting more range extension to the downside.

Tomorrow may reveal whether the rally was purely short covering and/or new money buying. Short covering alone weakens a mkt as it removes buying power, and once complete, the mkt usually resumes the direction it was moving. If there was enough longer term new money entering the fray, then continuation is very likely.

Nonetheless, today was a balancing day as it was an inside day. On a daily chart the 3 day balance can be clearly seen.
The profile graphic today is very reduced, I had to do this in order to fit the last 3 days. I want to show how value has been developing over the same. Viewing this confirms a mkt that it is in short term balance. Value areas are the gold bars to the left of the profiles

 

[CJS]

082715 Morning Update. Volume is getting back to normal and is moderate; 393K as of 0545am PST. Currently trading a 16 handle gap to the upside Gaps are measured from the prior pit highs/ lows. Gap rules are in play;
1) Go with all gaps that don’t fill right away. That means if it doesn’t back off early it’s probably not going to and is going higher. Large gaps may not fill or fill partially on the first day. pay attention to halfback: 1949.50
2) If the gap fills and value cannot get to at least overlapping, there will probably be a late day rally.

O/N high 1964.50
O/N low 1934.50
Prior pit high 1943
Prior pit low 1875.5
Settle 1936

 

[CJS]

NOTE - this recap is long. I usually make an effort to keep them short. But there was alot of things in todays session that are very worth documenting as a recap and well worth the read.

08/27/15 Recap and prep (for 8/28) Three very important concepts I want to cover in this recap. Nuances about the Market Profile. They are reliable and consistent.

--> First thing is, I was looking for a destination to be mindful of should the gap from 8/21 be closed today. The first one I noted on my chart was the 2 single prints in the 8/21 profile at 1981. These 2 single prints separate distributions in the profile and can be used as a target. The 2nd destination was the anomaly at 1986.25. Anomalies can also can be used as targets. The gap closed and the mkt spent 2.5 hours between these 2 levels and buyers struggled to push it any higher. What was working all morning wasn't anymore. That was, buyers buying every dip.
I also noted that the profile was very thin, indicating emotional, non-thinking buying. But with value migrating w price, it was difficult to determine what would unfold.

--> Second thing, long liquidation break. I track any breaks and/or rallies that happen in any period starting in J period. 64% of the time one or more of these events happen (115 sessions have been tracked). Aside from this metric, when buyers couldnt push price any higher after successfully buying every dip early on, and they spent 4 periods fighting w the bears, at the very least I knew it was real dangerous for anyone holding longs. The first indication was in I period when the 1 T.F. up had ceased. Once J opened and traded down w volume to support, the rout was on.

--> Third thing, referring to the gap rule that if the gap closes and value cannot get to overlapping, it increases the odds exponentially that a late day rally in the direction of the gap will ensue. Technically the gap was a handle shy of closing today's gap. But if you consider the prior 3 days as balance, combined that gap was closed. Value was nowhere near overlapping, and a violent rally followed. Incredible.

Top down:
Monthly: 1 T.F lower yet excess low forming. Balance and excess are the two most important concepts as far as the profile is concerned.
Weekly: 1 T.F lower yet excess low forming. Gap is closed.
Daily: 1 T.F higher out of balance (3 day) to the upside.

I apologize for the length of this recap. But these concepts played out today like a text book. I hope that at least one person reading this has picked up something to use in their own trading.

 

[CJS]

08/28/15 Morning Update. Volume: 312K as of 0550am PST. O/N inventory is short but not 100%. Looks like we will be opening inside yesterday's range, and value area. Balance rules apply.
1) Look above or below and fail.
2) Look above or below and accelerate.
3) Remain within balance.

Should the mkt accelerate to the upside. A couple of targets could be the afternoon rally high from 8/21/15 at 2002.25 (which is an anomaly on the profile), and the single prints from the same profile at 2006.75

A couple to the downside could be 1956.25 which is the B period low from yesterday. This is
where the buyers really stepped in and we had that upward march to 1986, also a high volume node. There is also the daily gap from yesterday that didnt close; 1943.

O/N high 1992.75
O/N low 1967.25
Prior pit high 1990.25
Prior pit low 1944.25
Settle 1989.5

 

[CJS]

08/28/15 Recap and prep (for 9/31). Volume today was substantially lower than the previous 7 sessions. 1.9M contracts and some change. Total rotational day with probes failing at both extremes on several occasions. Textbook day of balance. Very prominent TPO POC right in the middle of the profile. 12 wide out of a 14 TPO day. Not much else to comment on. 1 T.F. higher on a daily basis and the excess low on the weekly is confirmed. Next week should be interesting.

 

[CJS]

08/31/15 Morning Update. O/N volume is 242K as of 0545am PST. Overnight inventory presents itself as short. But when viewed on an expanded profile, we can see that the majority of the trade has been higher. These situations are difficult to distinguish. Currently a handle of gap to the downside. I doubt that will be the case come open. If we do open within Friday's range, balance rules apply. They are posted in Friday' Morning Update post.
O/N high 1977.25
O/N low 1959.25
Friday's pit high 2112
Friday's pit low 1971.5
Settle 1988.75

 

[CJS]

8/31/15 Recap and prep (9/1/15). Light volume 1.86M contracts traded. Two sided trade today. Price probes on both ends of the range today didn't find acceptance. In fact, almost a repeat of Friday's action. Keeping this trade environment in the back of my mind allowed me to capitalize on trades today.

A frequent thing Jim Dalton always mentions is that traders will do what works until it doesn't. Today was an example of that.

Value was overlapping to lower. So now we are 1 T.F. lower on all three of the Daily, Weekly and Monthly timeframes.

I'd like to point out that price struggled around the POCs (both TPO and Vol) from last Thursday's (lower end of range today) and Friday's profile (upper range of today). On a daily chart, we now have a 3 day balance bracket with upper extreme (1990.25) and lower extreme (1944.25) to use as destinations for trade.

Ive added a note to a couple of the charts, worth a read.

 

[CJS]

9/1/15 Morning Update. China is weighing on world markets. I don't have much to bring as far as an analysis. O/N trade is 50 handles in range. Mkt is 40+ handles gap down, volume is high; 510K as of 0550am PST. I'm going to be sitting on the sidelines until some form of structure develops, if at all today. In looking for targets; to the upside is closing the gap left from 8/27/15 (1944.25), then of course the gap from today. Being so large, I doubt that will fill today.
To the downside I find myself looking at the weekly low from 8/26 week (1875). Then the O/N halfback at 1941.25 could be a level to enter or exit depending on what the mkt does around this level.
O/N high 1966.25
O/N low 1916.25

 

[CJS]

9/1/15 Recap and prep (for 9/2/15). Very sketchy trading day. When the profile is viewed expanded, it is quite obvious that the am session's attempted direction was up. D & E period was spent balancing (two-sided trade) - I noticed that in this balance, sellers were stepping in on every rally. Once G period opened up (9-930am PST), sellers prevailed and the mkt liquidated. The pm session's attempted direction was down. Conflicting info to say the least.
Viewing this on a bar chart is not quite so obvious. A bar chart's attempted direction today (say 30min) could easily be interpreted as down for the session.
Let's break down some structure:

> Value remained in the upper portion of today's range.
> TPO POC remained in the upper portion of today's range.

So, the information tells me that the mkt wasn't accepting the attempted direction being down. We are back inside the previous weeks 3 day balance bracket. Every one of these 3 days had very decent excess lows. This is evidence of aggressive buyers trying to take advantage of low prices.

> There are a few anomalies left in today's profile, evidence of emotional selling.
> We have a naked gap to repair to the upside, which failed to fill on 8/27.
> There is a prominent TPO POC (1972.75) from yesterday that usually attract price.

Prominent and very prominent TPO POC's are anomalies and they get repaired by being revisited by the market during day session hours.
Both the excess lows below, the naked gap, and the prominent TPO POC above makes a good case for the market to make a move up. Should we open higher tomorrow, we could get a decent short covering rally. But if we open with more weakness, I'll be ready for that mindset too.

 

[CJS]

09/02/15 Morning Update. O/N trade is in balance. Balance rules apply. 1) Look above or below and accelerate. 2) Look above or below and fail. 3) Remain within balance and rotate.
Looking at the O/N profile you can see most of the trade has been in the upper portion of yesterday's range.
O/N Inventory is long but not 100%.
O/N high 1939.00
O/N low 1907.25
Prior pit high 1939.5
Prior pit low 1898.75
Volume as of 0545am PST 338K